Internet telephone provider Vonage agreed to pay $3 million and change how it deals with its customers after reaching a settlement with 32 states.

Among the allegations against Vonage was consumers continuing to be charged after canceling, not clearly disclosing the terms of its "free trial," and not honoring a supposed "money back guarantee." One problem consumers ran into -- something that particularly affected senior citizens -- was the failure to disclose in Vonage's numerous advertisements that having high-speed internet was a requirement to use the service.


The states also asserted that even though its offers were termed "free," Vonage charged activation fees, shipping and handling charges, taxes and a collection of other fees that most consumers didn't know they would be assessed during the trial period.

"Business practices like these are unfair to Michigan families," Michigan Attorney General Mike Cox said in a written statement. "When a business solicits new customers with advertisements offering a 'free trial period' or 'money back guarantee' they have an obligation to deliver."

You can read Texas' 54-page settlement with Vonage.

Vonage issued this statement to WalletPop:

"Vonage is pleased to have reached a settlement with various state attorneys general of their investigation into certain of the company's business practices. Vonage fully cooperated in the investigation and, as part of the settlement, has agreed to maintain or implement enhancements to its business practices that will improve customer experience and satisfaction, many of which the company implemented prior to completion of the settlement. ... No finding of any violation or wrongdoing was made by the states in connection with the investigation or settlement."

As part of the settlement, Vonage had to agree to more conspicuously display the terms of offers and provide a required voice over internet adapter in seven to 10 days to allow customers enough time to see how the service it works for them.